Bristol-Myers Drops After Cancer Drug Combo Rejected in Europe

(Bloomberg) -- Bristol-Myers Squibb Co.’s euphoria from a solid second-quarter earnings report lasted less than four hours.

During a call discussing the company’s second-quarter results, Chief Executive Officer Giovanni Caforio said that Bristol-Myers’s combination cancer treatment had failed to secure additional approval from European regulators for use in a form of kidney cancer. Adding new indications for the drugs has been a key part of their growth.

The revelation, which the company said it only learned of on Wednesday, reversed early gains in the shares. They dropped as much as 5 percent, the biggest decline in almost two months, and were down 3 percent to $57.26 at 12:12 p.m. in New York.

Chief Scientific Officer Thomas Lynch said Bristol-Myers will ask regulators to re-examine the application after Europe’s Committee for Medicinal Products for Human Use rejected its combination of Opdivo and Yervoy for use in previously untreated patients with kidney cancer.

Opdivo, among a new class of drugs that help the body’s immune system kill tumors, is approved around the globe for use to treat several forms of cancer. New York-based Bristol-Myers is racing to keep up with Merck & Co., whose blockbuster Keytruda dominates lung cancer, the biggest market for the drugs.

Earlier Thursday, Bristol-Myers said that sales for Opdivo totaled $1.6 billion in the second quarter, up 36 percent from a year ago and topping analysts’ estimates. The company’s quarterly profit also beat estimates.

Caforio also said on the call that the company doesn’t plan to increase the price to any of its drugs through the end of the year. He added that Bristol-Myers is committed to working with the Trump administration in reforming health-care costs.

Keytruda Pressure

Credit Suisse AG analyst Vamil Divan, who rates the shares neutral, wrote in a note before the earnings report that he anticipates the majority of previously untreated lung-cancer patients to be taking Keytruda later this year. By next year, he wrote, additional pressure will be on Bristol-Myers’s share of second-line lung-cancer patients.

Analysts are still waiting to see overall survival data from a positive study that combined Opdivo with Yervoy in a subset of lung-cancer patients. Opdivo sales are predicted to reach $7.6 billion in 2020. Yervoy sold $315 million last quarter, topping analysts’ estimates.

The company’s cancer race will be run without Murdo Gordon, who left this week as the company’s chief commercial officer to pursue another opportunity. Gordon’s departure surprised some analysts.

Bristol-Myers’s other big seller, blood thinner Eliquis, sold $1.6 billion, topping analysts’ estimates.

The company boosted ts 2018 adjusted earnings forecast to $3.55 to $3.65 per share, up from $3.35 to $3.45 per share. The company said its adjusted profit for the second-quarter was $1.01 a share, excluding some items, beating analysts’ estimates of 87 cents a share. Revenue totaled $5.7 billion, topping $5.5 billion predicted by analysts.

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